Business Start Up Kit
A Company obtains distinct legal existence only after it is registered under
the Indian Companies Act of 1956. On its registration, the Registrar
of Companies issues a certificate of incorporation under his
hand which is a conclusive proof or evidence that all the requirements
of the Companies Act in respect of registration have been complied
with and nothing can be inquired into as to the regularity of
the prior proceedings. The certificate thus issued cannot be
disputed on any grounds whatsoever. Certificate of incorporation
gives the company a legal existence from the date of the given
A private company can commence its business immediately after
obtaining the certificate of incorporation. But a public company
has to obtain a certificate to commence business from the Registrar
of Companies before it can commence business start up kit and
the Registrar grants such certificate on fulfilling the following
1. Minimum subscription has been allotted.
2. The directors have taken up and used for their qualification shares.
3. The statutory declaration and the prospectus or statement in lieu of prospectus has been filed.
Procedure of Registration of a Company
Mode of forming Incorporated Company
Any seven or more persons, or where the company to be formed will be a private
company, any two or more persons, associated for any lawful
purpose may, by subscribing their names to a Memorandum of Association
and otherwise complying with the requirements of the Indian
Companies Act in respect of registration, form an incorporated
company, with or without limited liability. Such a company may
be either a company having a liability of its members limited
by the memorandum to the amount, if any, unpaid on the shares
respectively held by them such business
start up kit is known as the company limited by shares
or a company having the liability of its members limited by
the memorandum to such amount as members may respectively undertake
by the memorandum to contribute to the assets of the company
in the event of its being wound up, such company is called as
a company limited by guarantee or a company not having any limit
on the liability of its members i.e. an unlimited company. Thus
any seven persons for forming a public company or any two persons
for forming a private company may come together and apply to
the Registrar by giving necessary information in the prescribed
form accompanied by required documents. They can form either
a company with limited or unlimited liability limited by shares
Registration of Memorandum and Articles
A declaration by an advocate of the Supreme Court or of a High Court, an attorney or a pleader entitled to appear before a High Court or a secretary, or a chartered accountant, in whole-time practice in India, who is engaged in the formation of a company, or by a person named in the articles as a director, manager or secretary of the company, that all the requirements of the Indian Companies Act, 1956 and the rules there under have been complied with in respect of registration and matters precedent and incidental thereto, shall be filed with the Registrar and the Registrar may accept such a declaration as sufficient evidence of such compliance.
If the Registrar is satisfied that all the requirements aforesaid have been complied with by the company and that it is authorised to be registered under this Companies Act, he shall retain and register the memorandum and the articles, if any.
Thus from the above mentioned provisions, it becomes clear that the procedure of registering a company begins with an application in the prescribed form which has to be filed with the Registrar of Companies of the State in which the registered office of the company is to be situated. Such application for the registration must be accompanied by the following important documents.
The Memorandum of Association of a company is very important and fundamental
document of the company. It is really the charter of the company
and it states various objects of the company for which the company
is to be established. It contains the fundamental conditions
upon which the company is allowed to be incorporated. It makes
clear the area of operations of the company and also regulates
the external affairs of the business
start up kit in relation to the outsiders. Memorandum contains
the following clauses:
1. The name clause
2. The registered office clause
3. The objects clause
4. The capital clause
5. The liability clause
6. The association clause
No company can be registered unless the Memorandum of Association is submitted to the Registrar. It is required to be prepared according to the provisions of the Companies Act. In the case of a public company, Memorandum must be signed by at least seven persons and if it is a private company, by two persons duly witnessed.
b) Articles of Association
Articles of Association contain the rules, regulations, bye laws, etc. for the internal management of the affairs of the company. Such rules, regulations are framed for carrying out the aims and objects as set out in the Memorandum of association. The following types of Companies are required to have their own articles.
1. Unlimited companies.
2. Companies limited by guarantee.
3. Private companies limited by shares.
The Articles of Association is required to be signed by the subscriber of the Memorandum of Association and registered along with the memorandum. A public company may have its own articles of association.
c) A letter of Approval
An application for availability of name under which the company proposes to be incorporated is required to be submitted with the Registrar of the Companies in prescribed form in the state where the registered office of the company is to be situated. The Registrar issues the letter of approval to that effect that the proposed name of the company has been approved.
A declaration making it clear that all the requirements of the Companies Act of 1956 relating to the registration have been complied with.
e) List of Directors
A list containing the names of persons duly signed by those persons listed
along with their consent to
act as directors. Such consent must be in writing and accompanied
with the signed agreement with every such director to take the
number of shares required to qualify himself as director. However
it is not required in the case of private companies and companies
not having a share capital.
f) Sanction from the Controller of Capital Issues
The sanction of the controller of capital issues is required if the capital exceeds Rs.10 millions.
A receipt showing that the registration fees, filing fee have been duly paid as per the provisions of the Indian Companies Act of 1956.
Notice of the situation of the registered office of the company is required to be given to the Registrar of the Companies within thirty days of the date of incorporation of the company. On receiving such note, the Registrar of the Companies records the same.
Certificate of Incorporation
When the documents required for registration are filed with the Registrar of Companies and if the Registrar is satisfied and convinced that all the statutory requirements regarding the registration have been duly complied with, he registers all necessary documents, i.e. memorandum, articles etc. and issue a certificate of incorporation under his hand.
Certificate of Incorporation is very important document which certifies that the company has been registered with the Registrar of Companies under the Companies Act of 1956 on a particular date. As and from the date of the issue of the certificate of incorporation, the company obtains a legal status and a distinct corporate personality.
Certificate of Incorporation and Pre-incorporation
Sometimes even before a company is duly incorporated, contracts
are entered into on behalf of the company. No such pre-incorporation
contracts are binding on the company. Its reason is very simple.
Two parties are necessary for any legal contract, whereas the
company before it is incorporated is a non-entity. If solicitors,
chartered accountants prepare certain documents for a company
business start up kit
on the instructions of its promoters for getting the company
registered, they cannot recover any amount as their remuneration
from the company. The company cannot be sued in law for the
expenses for the want of existence of the company and ratification
is also not possible. Even pre-incorporation contracts are not
binding on third parties.
When the contracts are entered into by the agents on behalf of a company which has not come into existence and if they do not fall within the scope of the objects of the company stated in the Memorandum of Association, the agents can be held liable for such contracts.
When a certificate of incorporation is issued to a company, the company acquires a perpetual succession, the members may join the company or leave it, but the company continues to be in existence for ever, unless it is wound up.
Assets and Liabilities of a company
On incorporation, the property, assets etc acquired in the name of a company
become the property, assets of the company and not of its members.
The members get only the right to have a share in the profits.
Again any liability of the company is not the liability of individual
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